Yes, Yes, and Yes. I've also tried to run this as a python script as well as manually trying to do it in ArcMap.

What I have realized is that there seems to be something wrong with the point files. The point file contains only one point. However, if I use a file that contains many points, select the point I'm interested in, and then perform a select by location, that works. But if I select the same point in the stand alone shapefile it doesn't work.

Robert - I did follow all those guidelines with no luck with my point files that only contain one record. Works fine for point files containing multiple records. This is a problem though since I have a script that loops through a folder containing hundreds on individual point files.

Robert - I did follow all those guidelines with no luck with my point files that only contain one record. Works fine for point files containing multiple records. This is a problem though since I have a script that loops through a folder containing hundreds on individual point files.

try bring it all into a personal geodatabase in the same feature dataset.